Title
Consider/Discuss/Act on a Resolution Approving a Chapter 380 Economic Development Agreement and Project Plan Implementation Agreement with Hugs Café Inc. for the Fire Suppression Project at 221 Andrews Street
Summary
COUNCIL GOAL: Enhance the Quality of Life in McKinney
(5C: Promote reinvestment activities and ordinance changes in McKinney's historic downtown that balance preservation of historic character and current market needs)
MEETING DATE: October 21, 2025
DEPARTMENT: Development Services - Planning Department
CONTACT: Cassie Bumgarner - Planning Manager
RECOMMENDED BOARD ACTION:
• Staff recommends denial of the applicant’s request for TIRZ No. 1 funding in the amount of $147,781.85 because the request exceeds funding limits established within the TIRZ No. 1 policy.
• However, Staff is recommending approval of a proposed resolution in the amount of $73,890.93 for the proposed project.
ITEM SUMMARY:
• The applicant requests an economic development grant from Reinvestment Zone Number One in support of a fire suppression project at 221 Andrews Street. The request is to assist specifically with the following TIRZ 1 eligible expenses under the Vacant/Underutilized Sites/Buildings project category of the Project Plan:
o Fire Suppression
§ Fireline and FDC utilities
§ Specialty kitchen hood
§ Wet fire protection system
• As proposed, the applicant is requesting $147,781.85 in TIRZ funding to offset the cost of the fire suppression project.
• Per the TIRZ Administration Policy, the allocation and/or awarding of TIRZ 1 funds for fire suppression shall be limited to the lesser of the grant/reimbursement or $100,000 per qualifying project and should be considered on a 50/50 match basis.
• The applicant is requesting a meritorious exception to exceed the funding cap for fire suppression and to not provide a 50/50 match.
BACKGROUND INFORMATION:
• Under Chapter 311 of the Texas Tax Code and Chapter 380 of the Texas Local Government Code, the TIRZ Board has the authority to make loans or grants of TIRZ funds for the purpose of promoting local economic development and stimulating businesses and commercial activity within the reinvestment zone.
• The proposed project is an eligible project in the TIRZ No. 1 Project Plan under the category of Vacant/Underutilized Sites/Buildings, which is defined as “relatively smaller projects (under $5.0 million) for the incremental redevelopment of vacant/underutilized Town Center sites or buildings.” Specific activities eligible for TIRZ No. 1 funding under the Vacant/Underutilized Sites/Buildings category include:
o Environmental remediation and associated interior/exterior demolition
o Historic façade restoration improvements/easements
o Acquisition and restoration of historic sites (public projects)
o Street, utility, and streetscape improvements
o Municipal land acquisition
o Critical maintenance
o Fire suppression
FINANCIAL SUMMARY:
• Each year $400,000 is allocated to the “Vacant/Underutilized Sites/Buildings” project category of Reinvestment Zone Number 1 to support project requests under this category. The current budgeted funds in this account for FY26 are $400,000.
• The three Vacant/Underutilized Sites/Building project requests for the October 21 meeting would come from this $400,000 budget. If these three requests were approved with the amounts staff recommended, the remaining FY26 funds would be $174,969.95.
• The applicant’s request exceeds policy and guidelines set forth for funding. They are requesting a meritorious exception. If fully funded, this would not require a budget amendment.
• FY26 began October 1, 2025. The projected fund balance at the end of FY25 is $27.8 million with $2.6 million being restricted for transportation. This fund balance is across all of TIRZ1, which includes catalyst projects.